Commodity currencies such as the Australian, the New Zealand and
the Canadian dollars weakened against their major counterparts in
the Asian session on Wednesday, as most Asian stock markets traded
lower tracking the weak cues overnight from Wall Street after crude
oil futures tumbled into negative territory. Weak earnings outlook
from local companies also dented investor sentiment.
Investor reaction was muted to news that U.S. index provider
MSCI has decided to add Chinese A-shares into its benchmark
Emerging Markets Index. MSCI will add 222 China A shares in the
index starting in June 2018.
Crude oil delivery for August is currently down by 0.06 percent
or $43.45 per barrel.
The crude oil prices fell amid reports that Nigeria and Libya
are ramping up production. The two most vulnerable OPEC nations are
exempt from the cartel's supply quota deal with Russia. While some
increases in production were expected, the pace of Libya's output
is particularly surprising.
Traders await the official report of U.S. crude oil supplies
from the Energy Information Administration later in the day.
Meanwhile, the American Petroleum Institute reported Tuesday that
the U.S. crude supply showed a decline of 2.7 million barrels for
the week ended June 16.
The NZ dollar started falling following the disappointing dairy
auction results.
In the latest GlobalDairyTrade auction held in the recent
session, the dairy prices fell 0.8 percent in the trade-weighted
index's first decline since March, with an average selling price of
$3,434 per tonne. While prices for whole milk powder, New Zealand's
key export, dropped 3.3 percent to US$3,022 a tonne
In other economic news, data from the Westpcac Institutional
Bank showed that Australia's leading index softened in May but it
continued to signal above trend growth momentum. The
Westpac-Melbourne Institute Leading Index, which indicates the
likely pace of economic activity relative to trend three to nine
months into the future, fell to 0.62 percent in May from 1.01
percent in April.
Tuesday, the Australian, the New Zealand and the Canadian
dollars showed mixed trading against their major counterparts.
While the aussie and the kiwi rose against the yen, they fell
against the U.S. dollar and the euro.
The Canadian dollar rose against the yen and fell against the
U.S. dollar. Against the euro, the loonie held steady.
In the Asian trading, the Australian dollar fell to a 1-week low
of 0.7555 against the U.S. dollar and a 5-day low of 84.05 against
the yen, from yesterday's closing quotes of 0.7579 and 84.46,
respectively. If the aussie extends its downtrend, it is likely to
find support around 0.73 against the greenback and 82.00 against
the yen.
Against the euro and the NZ dollar, the aussie dropped to 2-day
lows of 1.4736 and 1.0457 from yesterday's closing quotes of 1.4688
and 1.0467, respectively. The aussie may test support near 1.50
against the euro and 1.03 against the kiwi.
The aussie edged down to 1.0030 against the Canadian dollar,
from yesterday's closing value of 1.0055. On the downside, 0.99 is
seen as the next support level for the aussie.
The NZ dollar fell to 5-day lows of 0.7216 against the U.S.
dollar and 80.28 against the yen, from yesterday's closing quotes
of 0.7240 and 80.69, respectively. If the kiwi extends its
downtrend, it may find support around 0.71 against the greenback
and 78.00 against the yen.
Against the euro, the kiwi edged down to 1.5429 from yesterday's
closing value of 1.5375. On the downside, 1.58 is seen as the next
support level for the kiwi.
The Canadian dollar fell to a 5-day low of 83.75 against the
yen, from yesterday's closing value of 84.00. The loonie is likely
to find support around the 82.00 region.
Against the U.S. dollar and the euro, the loonie dropped to
1.3283 and 1.4791 from yesterday's closing quotes of 1.3267 and
1.4771, respectively. If the loonie extends its downtrend, it could
find support around 1.35 against the greenback and 1.51 against the
euro.
Meanwhile, the safe-haven yen fell against its major rivals amid
rising risk aversion.
In economic news, members of the Bank of Japan's monetary policy
board said the country's economic recovery continues, although its
pace has been somewhat delayed, minutes from the bank's April 26-27
meeting revealed on Wednesday. There remains considerable
uncertainty in overseas economies, the bank said, and downside
risks to Japanese economic activity remain.
The yen rose to a 5-day high of 123.84 against the euro and a
6-day high of 140.46 against the pound, from yesterday's closing
quotes of 124.05 and 140.70, respectively. If the yen extends its
uptrend, it is likely to find resistance around 122.00 against the
euro and 138.00 against the pound.
Against the U.S. dollar and the Swiss franc, the yen advanced to
2-day highs of 111.19 and 114.12 from yesterday's closing quotes of
111.43 and 114.31, respectively. The yen is likely to find
resistance around 108.00 against the greenback and 112.00 against
the franc.
Looking ahead, U.K. public sector finance data for May is due to
be released at 4:30 am ET.
At 7:00 am ET, Bank of England Chief Economist Andy Haldane is
expected to speak in Yorkshire.
In the New York session, U.S. existing home sales data for May
and U.S. crude oil inventories data are slated for release.
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